Western Sizzlin makes exchange offer for Jack in the Box shares

ROANOKE Va. Western Sizzlin Corp. has proposed an exchange offer for up to 680,500 shares of Jack in the Box Inc., which would represent about 1.2 percent of that company's 56.7 million shares outstanding.

 Jack in the Box said in a statement released Monday that it had reviewed Western Sizzlin's press release disclosing the planned exchange offer, but specified that it had no further information about the overture and would not offer a comment until the appropriate securities form had been filed.

The exchange offer for stock in Jack in the Box, which operates or franchises more than 2,500 restaurants, would include a stock swap for 1.607 shares of Western common stock for one share of Jack in the Box common stock. On Friday, the day of Western Sizzlin’s announcement, the closing price for Western common stock was $14.10 and the closing price for Jack in the Box common stock was $19.37. Based on those prices the exchange ratio for the offer represents a value of $22.66 per share of Jack in the Box common stock. For the past 52 weeks, Jack in the Box had traded between $17.79 and $35.13 per share.

Western Sizzlin, the Roanoke-based parent to a system of 117 family-dining steakhouses, is led by chairman and chief executive Sardar Biglari, an activist investor who also runs The Lion Fund investment firm out of San Antonio, Texas. Through his fund -- and through Western Sizzlin subsidiaries Western Investments Inc. and Western Acquisitions -- Biglari has purchased stock holdings in numerous restaurant companies, including Stake n Shake Co. and the formerly public companies Friendly Ice Cream Corp. and Applebee’s International Inc.

Biglari holds the authority to coordinate all investment and capital allocation decisions at Western Sizzlin, according to public corporate documents. He can even borrow funds against Western Sizzlin holdings in connection with making investments in marketable securities or derivative securities, corporate filings show. As of August, Biglari can manage surplus cash up to $10 million and can borrow a maximum of $5 million.

The Jack in the Box offer is pending a filing and activation of a registration statement with the U.S. Securities and Exchange Commission, Western Sizzlin said in a statement. As of Monday, no registration forms had been filed with the SEC. Western Sizzlin's executives and board directors hold enough shareholder voting power to have already approved the transaction, the company said.

Western Sizzlin most recently completed an exchange offer for ITEX Corp., which is based in Bellevue, Wash., and runs a business network that uses cashless payment technology for business transactions. It trades as an over-the-counter bulletin board stock. After that exchange, which required Western Sizzlin to issue 57,196 shares of its common stock, the restaurant company held a 9-percent stake in ITEX.

As of June 30, the end of Western Sizzlin’s latest quarter, it held, through both the restaurant company and The Lion Fund, about 13 percent of Steak n Shake stock.

In addition to its 2,100-unit namesake chain in 18 states, Jack in the Box owns Denver-based Qdoba Mexican Grill, which has more than 400 fast-casual restaurants in 40 states.